TaxTMI 
TaxTMI 
1988 (8) TMI 94
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....income arising from the said property was not includible in the computation of the total income of the assessee under section 64 of the Income-tax Act, 1961 ?" The facts of this case, shortly, are that the assessee, an individual, was the real owner of the property at No. 159, Chittaranjan Avenue, Calcutta though it was nominally purchased under a sale deed dated June 10, 1940, in the name of his first wife, Bhagwan Devi, who died on January 2, 1953, leaving three sons and five daughters. After the death of the first wife, the assessee married one Kusumlata, daughter of Srimati Lakshmi Devi of Benaras, on December 2, 1954. It was the case of the assessee that prior to the marriage, there were negotiations between the assessee and Srimati....
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....ssessee. He rejected the contention that the pre-nuptial agreement was an adequate consideration for the transfer of the property in trust for the benefit of the unborn children and that the provisions of section 16(3) had no application. In the appeal before the Appellate Assistant Commissioner, the assessee relied upon the affidavits of Srimati Lakshmi Devi, Srimati Kusumlata More and the affidavits of the two mediators, Sri Anantram Poddar and Sri Keshordeo Sangarnia. The Appellate Assistant Commissioner held that the pre-nuptial agreement set up by the assessee sounded incredible in spite of the affidavits of several parties. The Appellate Assistant Commissioner having confirmed the above finding of the Income-tax Officer, the assessee ....
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....urther appeal by the assessee, the Tribunal, following its earlier order in the assessee's appeal for the assessment year 1961-62, upheld the assessee's contention and directed the exclusion of the income from the property at No. 159, Chittaranjan Avenue, Calcutta, from the assessee's total income. The question which has been referred to this court is whether the income arising out of the said property being premises No. 159, Chittaranjan Avenue, Calcutta, was includible in the computation of the total income under section 64 of the Income-tax Act, 1961. The answer to this question will depend on the fact whether the transfer was made by the assessee for adequate consideration. Section 64(iv) of the Act will apply only if the assets are ....
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....ill make a settlement on trust in respect of your property at No. 159, Chittaranjan Avenue, Calcutta, in favour, and for the sole benefit of her children for their maintenance, education and bringing up and that the said issues of my daughter will be entitled to take such rents and profits thereof in equal shares." She has referred to the said negotiation in the presence of Keshordeo Sangarnia and Anantram Poddar. She wanted his written consent for those terms, which the petitioner gave by his letter dated November 5, 1954. The marriage took place on December 2, 1954. Three sons were born out of the marriage by about 1960 and a settlement was executed on August 10, 1960, by the assessee. The deed of settlement refers to the pre-nuptial p....
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....ity for her daughter, the marriage being one to an aged person, a widower with five sons and three daughters. On these facts, the Tribunal was justified in accepting the existence and genuineness of the pre-nuptial agreement. The next question is whether there was any adequate consideration. The Supreme Court, in the case of Tulsidas Kilachand v. CIT [1961] 42 ITR 1, held that the expression "adequate consideration" occurring in section 16(3)(b) of the 1922 Act denotes consideration other than love and affection. The word "adequate" means, equal to the need, fully sufficient and proportionate. According to Black's Law Dictionary (15th Edition), adequate consideration means such consideration which is equal, or reasonably proportioned to ....